The Council of Small Business Organisations Australia (COSBOA) is calling on the NSW Government to go beyond plugging budget blowouts in the state’s workers’ compensation system and make sure the proposed reforms actually work for small business owners on the ground.

With an 8 per cent premium hike already confirmed for the new financial year and billions lost from the scheme, COSBOA says reform is essential. However, COSBOA CEO Luke Achterstraat says the reforms have to cut complexity, not just costs.

“Small business owners aren’t compensation lawyers,” says Achterstraat.

“The current system is like trying to run a small business while bailing water out of a leaky boat. Yes, the NSW Government is right to try and plug the holes, but we also need to make sure they’re not redesigning the boat in a way that makes it harder for small businesses to steer.”

The Workers Compensation Legislation Amendment Bill 2025 proposes several major changes off the back of the NSW Upper House report into psychological injury claims. While COSBOA supports efforts to rein in skyrocketing costs and vague entitlements, they warn the reforms must be simple, clear and fair for time-poor small business owners.

What COSBOA supports

COSBOA has thrown its weight behind some key reforms in the Bill, including:

Reasonable management action provisions: Section 8D introduces clearer protections for everyday management activities like performance reviews or disciplinary action.

Tribunal oversight: Section 8F requires psychological injury claims to meet a basic legal threshold, helping weed out speculative or vexatious claims.

Time limits: Section 39A puts a cap on how long claims can be submitted after an incident, which could help contain long-term cost blowouts.

Stronger controls on medical expenses: Tighter language aims to reduce rorting and keep costs fair and proportionate.

Despite welcoming parts of the reforms, COSBOA says some of the changes don’t go far enough to shield small business from red tape and rising costs.

“You can’t promise a high-performance vehicle and expect it to run on fumes,” Achterstraat says.

What COSBOA wants

To make the system workable in the real world, COSBOA is calling for a more measured and supportive approach. Especially for smaller operators. That includes a phased rollout of any new benefits, so businesses with fewer than 50 staff aren’t overwhelmed from day one.

They’re also pushing for a cap on premium increases, suggesting a 5 per cent ceiling to shield small businesses from nasty bill shocks that could derail their cash flow.

Support needs to be practical too. COSBOA wants to see the creation of a dedicated small business advice unit, alongside mental health resources tailored specifically to small teams, who often don’t have the luxury of HR departments.

Achterstraat says clearer guidance is essential, including free training, plain-English templates and definitions, so business owners can feel confident they’re ticking the right boxes without needing a law degree.

And finally, they want the paperwork pared back. A simpler, streamlined claims process and stronger accountability from insurers would help business owners do the right thing without drowning in admin.

More consultation needed

Above all, COSBOA is calling for the NSW Government to consult small business owners properly before rolling out the next wave of reform.

“If we want this system to stay afloat, we need to do more than patch it up,” Achterstraat says. “We need to build something that small businesses can actually operate, not just survive in.”

“Let’s make sure this isn’t another well-intentioned reform that leaves small business bailing water without a lifeboat.” Achterstaat concludes.

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